Question:
“I just sold an investment property and want to 1031 exchange into a short sale. What short sales do you have?”
Answer:
Danger…1031 exchanges and short sales don’t mix!
As you may know, when you do a 1031 exchange, you have certain time limits to find and close on the property you’re buying.
Specifically, from the date you close your sale, you have 45 days to “identify” the property(s) you want to buy and (running concurrently) 180 days to close.
Short sales can be delayed, denied, or (if in default) foreclosed on.
I only recommend considering a short sale if:
- You also identify other properties, and/or
- It’s an already approved short sale with a quick close—though that’s no guarantee it will close quickly.
Be very careful. If you’re depending on a short sale to close within a certain time period, you may be disappointed and have your 1031 exchange fail, forcing you to pay the taxes you’re trying to defer.
